Washington’s Charles Smith wine brand sold to giant Constellation for $120 million

Originally published October 18, 2016 at 6:47 pm
Updated October 18, 2016 at 7:07 pm

Charles Smith is one of the largest wine producers in Washington. (Andy Perdue)

Charles Smith sold his eponymous label to Constellation Brands, a deal he says will be good for the state’s wine industry. Smith, who owns the Jet City winery in Georgetown, remains the state’s fourth-largest wine producer with his other brands.

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Charles Smith sold his eponymous wine brand to mega-giant Constellation Brands for about $120 million, a deal announced Monday that he says will have a positive impact on the state’s wine industry.

Smith, however, kept his other brands and says he will continue to charge ahead.

“This is not an early retirement plan for Charles Smith,” he said Tuesday. “I’m only 55 years old. I’m not going to give everyone a break.”

Smith began working on the deal with New York-based Constellation Brands about a year ago, which is about the same time he was opening his Jet City winery in the Georgetown neighborhood — an operation that has exceeded Smith’s lofty expectations.

“It is beyond what I would have imagined,” he said. “It’s ground zero for everything I’m doing.”

Smith also has two tasting rooms in Walla Walla.

Constellation already has a large footprint in Washington, having purchased Hogue Cellars in the Yakima Valley in 2001. It also bought most of the wineries from Corus Brands that same year, including Columbia and Covey Run wineries in Woodinville. Corus Brands became Precept Wine in 2003.

Today, Gallo owns Columbia and Covey Run, which means the world’s two largest wineries — Gallo and Constellation — have a growing presence in Washington. As far as production goes, Ste. Michelle is far and away the state’s leader, producing two-thirds of the wine made in Washington, or 8.2 million cases. Precept is No. 2 at 1.2 million cases, and the Charles Smith acquisition — with about 200,000 cases — puts Constellation at No. 3, at nearly 1 million cases.

Smith said his winemaking team will remain intact, with Brennan Leighton his head winemaker in Seattle and Katie Nelson his Eastern Washington winemaker. Leighton and Nelson are former Ste. Michelle winemakers.

These wines are made primarily at Wahluke Wine Co., a custom-crush facility in Mattawa, Grant County. There is no indication that any of the wine production would be moving to Hogue’s large production facility in Prosser.

This is the second time Smith has sold off a large chunk of his company. In 2006, he entered into a sales, distribution and marketing agreement with Precept for his Magnificent Wine Co., a brand best known for its “House Wine” label.

Precept ultimately purchased Magnificent from Smith in 2010.

Smith said the acquisition will change the state wine industry because Constellation now has a greater commitment to the region.

“Washington is going to be a greater focus for Constellation,” he said. “For the public at large, there might be a new perception of Washington wines. Washington wine needs its own voice and will have an even stronger voice with Constellation.”

Smith wouldn’t say what his next move is, but the maverick of the state wine industry undoubtedly has something planned.